Listing Discounts Come Roaring Back

(Mountain Lakes, NJ, July 27, 2017) — With the housing market hot again, discount brokers are
once more setting their sights on what they consider
the hefty commissions charged by traditional brokers.

Seattle-based brokerage Redfin has expanded an offering
that charges sellers a commission of just 1 percent.
And in Philadelphia, startup brokerage Houwzer promises
to sell a house for a flat fee of just $495.

Traditional brokers, for their part, say many sellers
are happy with the status quo — and would rather not
skimp when embarking on the largest financial
transaction of their lives. While the once-common 6
percent real estate commission has faded in many
regions of the country, commissions have yet to fall
much below 5 percent.

During the last real estate boom, a spate of discount
brokers promised to significantly disrupt the
traditional real estate industry. That didn’t pan
out, but entrepreneurs again have targeted the
traditional brokerage model.

Redfin says it has begun to shift its value proposition
from buyer rebates to rock-bottom seller commissions.

For years, the company focused on rebates to buyers and
1.5 percent commissions to sellers. Now, though, Redfin
has begun offering 1 percent listing fees in Baltimore,
Chicago, Denver, San Diego, Seattle, and Washington, DC
— and Redfin says it has seen an increase in listing
business in those markets.

The 1 percent listing fee does not include any
buyer’s agent commission, which is typically between
2 and 3 percent and paid by the seller.

Traditional brokers might question how Redfin can turn
a profit at such a low commission rate. The company
says it simply is shifting incentives to be more
attractive for sellers and less generous for buyers.